The Chicago Tribune this morning reports on an insidious new phenomenon: online payday loans. One woman, Rochelle Parker, landed an 842 percent APR loan, and a succession of loans to pay off the earlier ones. But that’s nothing says the Trib: some of these loans’ rates can hit 2,000 percent.
The paper says some states have gone after the operations, but have had difficulty tracking them down, and it reports that even the payday-lending association (wouldn’t you love to work for them) is calling for regulation, though they also blame the proliferation of sites on the crackdowns on the industry. Many sites are, of course, total scams as opposed to simple rip-offs.
People like Parker are falling through one of the newest trapdoors in the cash-strapped economy—online payday loans. Such loans typically were the province of payday loan storefronts that cater mostly to the working poor and low-middle-income workers, short on cash until payday. Now online loans are spreading to the middle class as a result of rising gasoline and food prices, tightening credit, the subprime mortgage fallout and the ease of home computer access to the Web.
Maybe this industry (or at least its usurious practices) can finally be put to sleep now that it’s affecting the middle class, not just the poor—which the Trib says is increasingly the case.
The Trib tells us that Illinois protects its citizens by capping payday loans at a low, low 400 percent annual interest rate, but the industry is back on its heels—New Hampshire last week capped loans at 36 percent and Ohio is trying for 28 percent. West Virginia bans them entirely.
Be careful what you wish for
It looks like Rupert Murdoch won’t get his paws on Newsday after all. His Wall Street Journal puts the news inside the Marketplace section after a weekend scoop that News Corporation had backed out of the bidding.
The $650 million bid by Cablevision is $70 million more than Rupert wanted to pay and is extra good news for seller Tribune Company, which needs to pay down its crippling debt load—and fast. The Journal reports that despite recent reports, the deal doesn’t include Newsday’s real estate.
While a Newsday deal will ease Tribune’s debt load, the company will lose an important asset. The daily and its related businesses had nearly $500 million in revenue last year, about 10% of Tribune’s revenue, according to the company’s annual report filed with the Securities and Exchange Commission.
I’m no fan of Murdoch, but it’s unclear if he’d be worse than Cablevision’s notorious Dolan family, which Newsday itself reports that a deal would “create a regional news and advertising giant with a powerful grip on Long Island.
The New York Times looks at the company and the family on C1, noting up high that “Like many actions taken by the Dolans ” their bid “has resulted in a collective head scratch.” It quotes an anonymous executive who’s done business with the family before saying “their interest in Newsday could not be entirely economic ‘because there’s not a business rationale to spend what they’re willing to spend.’”
The WSJ quotes a media consultant saying Cablevision could add 100,000 papers to Newday’s 380,000 circulation, but is skimpy on how exactly that would happen in this disastrous environment for newspapers. It says Murdoch is slashing costs at the money-losing New York Post and raising newsstand prices.
The Times gets a little rumor-y for its kicker, but it brings the Quote of the Day:
A cynical theory for the Dolans’ recent deal-making is making the rounds of Wall Street. Under this line of thinking, the family is so angered that shareholders killed the buyout that the Dolans now consider the company their own private fief.
“That’s ridiculous,” Mr. Moffett said. “No one’s going to say, ‘I’m going to light up some of my billions just to spite shareholders.’ ”
Separately, the Times on C1 takes a look at what’s up with newspaper-killer Craig Newmark of Craigslist. To sum up: he’s squabbling with minority shareholder eBay, doesn’t think he’s a newspaper killer, and is expanding into ever smaller communities.
We would be truly shocked if this were true